Are natural gas prices getting ahead of the fundamentals???

[dan_s]

Trading Economics:
US natural gas futures surged over 2.5% to $2.9/MMBtu on Friday, marking a more than 12% increase for the week, driven by expectations of increased cooling demand due to warm weather forecasts for June. Forecasts indicating above-normal temperatures in various regions, particularly the Midwest and East, fueled market optimism, with expectations for this heat pattern to persist in the coming weeks. Also, US gas production is still down around 9% in 2024, as energy firms like EQT and Chesapeake Energy delayed well completions and reduced drilling activities earlier in the year. On the other hand, the latest EIA report showed a larger-than-expected storage build last week, bringing gas stockpiles 26.5% higher than the seasonal average.

I believe that in addition to HOT summer weather driving up demand for power generation, the confidence that the following new LNG export facilities will soon be on line is pushing up gas prices.

Per the DOE website:
New LNG Export Facilities coming soon
> 3.40 Bcfpd < Venture Global Plaquemines, Louisiana Q3 2024
> 1.59 Bcfpd < Cheniere Train 3 at Corpus Christi, Texas mid Q4 2024
> 1.30 Bcfpd < Exxon Golden Pass Train 1, Sabine Pass, Texas late Q4 2024
> 1.27 Bcfpd < Exxon Golden Pass Train 2, Sabine Pass, Texas Q1 2025
> 7.56 Bcfpd of additional demand for U.S. natural gas should push U.S. ngas prices over $5.00/MMBtu

Two more large LNG export facilities are also fully approved, but they won't be on-line until late in 2027.
> 1.91 Bcfpd < Sempra Train 1, Port Arthur, Texas Q4 2027
> 3.61 Bcfpd < NextDecade Train 1, Rio Grande, Texas Q4 2027

Risks to natural gas prices
> Demand for power generation does not go as high as expected.
> Venture Global's LNG facility at Plaquemines is delayed.
> The Big Gassers ramp up production again.

My forecasts are now based on the following gas prices
2024
> $2.10 Actual for Q1
> $2.25 for Q2
> $2.50 for Q3
> $3.00 for Q4 < If we do have a hot summer + a couple of hurricanes enter the GOM, ngas prices could go much higher in Q4
2025
> $3.50 for Q1 < Assuming we have a normal winter
> $3.00 for Q2
> $3.50 for Q3
> $4.00 for Q4